IRS’ ‘dead horse’ tax preparer regulation argument doesn’t appear to move federal appeals court

September 25, 2013

A federal appeals panel did not appear impressed by the "dead horse" argument the Internal Revenue Service rode into court with in defense of the agency's effort to regulate paid tax preparers.

During oral arguments Sept. 24 before the U.S. Court of Appeals for the D.C. Circuit, the judges repeatedly questioned the IRS' attorney, Gilbert Rothenberg, about whether Congress had empowered the agency to issue regulations imposing
mandatory testing and continuing education requirements on return
preparers.

Three independent tax professionals don't think the IRS has the oversight authority. With the assistance of the libertarian Institute
for Justice, they filed suit (Loving vs. IRS) to stop the agency's planned regulatory requirements. In January, a federal judge sided with the tax preparers, leading to this week's appeals hearing.


Civil-War-horses-in-battle2Rothenberg, the Department of Justice's appellate section chief, offered an intriguing 129-year-old law, the Horse Act of 1884, as authority for the IRS' proposed tax preparer oversight system.

From horses to EAs: Following the Civil War, claims for losses incurred in the battles were piling up. Most of the claims were for horses, specifically costly thoroughbreds or show horses.

Uncle Sam found that many of the dubious claims for highly valuable property were brought by agents of the ostensible owners.

Questionable representatives sought out people who might have a claim and offered, for a percentage of what was collected from the government, to recover their losses.

To stop con artist claimants, Congress decided that regulation was necessary. It passed the Enabling Act of 1884, popularly known as the Horse Act of 1884, and President Chester Arthur signed it into law.

With the bill's enactment, a representation standard was set. Representatives were subject to suitability checks, investigations of criminal records and moral character and testing. Those who passed the requirements were known as Enrolled Agents (EAs) and were able to file the war claims.

EAs remain part of the tax representation process today. And they still face testing and other requirements before they can argue for clients before the IRS.

"I hate to beat a dead horse, especially one from the Civil War era," said Rothenberg, but he did, citing the 1884 law as justification for the IRS efforts to further regulate other tax preparers.

Dead horse provides little mileage: The judges, however, seemed skeptical of Rothenberg's argument, the IRS' historical regulatory power and the dead horse they rode in on.


Matthew R. Madara, covering the hearing for Tax Analysts, reported that the three-judge panel peppered Rothenberg with questions. The inquiries ranged from whether Rothenberg's argument was properly phrased to the last time the IRS had used the statute in question (U.S. Code 330(a)(1)) to the terminology the IRS used in describing those who represent individuals before the Treasury Department.

The consensus of practitioners who heard the arguments, during which the judges were much more critical in their questioning of Rothenberg than Loving attorney Dan Alban, is that the panel will give the tax preparers fighting regulation another victory.

If that is indeed the case, the IRS will likely turn to Congress for specific regulatory authority. The Taxpayer Protection and Preparer Fraud Prevention Act of 2013, introduced earlier this year, would give the IRS that ability. Some Senators are exploring a companion bill for that chamber.

We'll find out when the court's decision is handed down in a few months whether such legislation is needed.

Civil war horses photo courtesy
Conner Prairie Interactive History Park

You also might find these items of interest:

Share:

The More Tax Posts tab at the top of this page will take you to, well, more tax posts. You also can search below for a tax topic. 

Latest Posts
6 tax moves to consider this June

June 3, 2026

Definitely take a break this June. But taxes don’t take vacations. So, you also should…

Read More
Tax Season 2026 Continues!

We made it. Tax Day 2025 is finally over. For most of us. When the filing season started on Jan. 26, millions who were expecting refunds filed immediately. Most of us got our returns to the Internal Revenue Service by April 15. But plenty of taxpayers also got extensions. They are looking at an Oct. 15 filing deadline.

Those procrastinating filers aren’t a problem. In fact, the IRS appreciates taxpayers who take time to fill out their 1040 forms correctly. It also is grateful that tax submissions are spread out a bit, especially now that the IRS is a leaner agency. Processing returns is easier when they arrive throughout the year instead of in massive bunches.

But enough about Uncle Sam’s tax collection issues. The focus now is on all y’all who filed for extensions, giving you another six months to complete your return. Since your new mid-October due date will be here before you know it, let’s get started now on meeting it.

The ol’ blog is here to help you finish up your extended Form 1040. You can start with January’s tax tips page, which has links to the rest of the year’s tips by-month collections. You also can peruse various tax categories for more tailored advice by clicking on the More Tax Posts drop-down menu at the top of this (and every) page.

And to make sure you don’t miss your new filing deadline, the count-down clock below will let you know just how much time you to file by Oct. 15. At the latest.e. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

Comments